Chinese Police Arrest 234 Suspects in Major Banking Scandal: Public Security Bureau

BEIJING (Sputnik) - Police in China’s central Henan province have arrested 234 people, suspected of involvement in the biggest banking fraud in the country, which led to mass protests in late July, the local public security bureau said on Monday.

"The public security authorities managed to apprehend a large number of suspects, of which 234 people were arrested. Significant progress has been made in the recovery of stolen goods and reparation," the bureau said in a statement.

A criminal group, led by suspect Lu Yi, illegally controlled four banks and committed other serious crimes, the statement specified, adding that the group lured people with high annual interest on deposits.

The scandal erupted in April, when a number of banks in the provinces of Henan and Anhui suspended online banking, which led to approximately 400,000 people losing access to their deposits totaling reportedly 40 billion yuan ($5.8 billion).

Financial regulators issued the start of refund payments following a mass demonstration outside the regional branch of the People's Bank of China on July 10, when hundreds of depositors of the relevant banks demanded compensation.

The preliminary investigation showed that the criminal group allegedly used banks for illegal withdrawal of deposits since 2011. The group illegally gained control over creditors, sold financial products through its own platform and set up shell companies to hide information, according to the public security bureau.